Egypt: return of the deep state

With the referendum the military
secures its privileges, but its main challenge is the economic crisis.

If someone fell into a coma in 2011
before the Egyptian “revolution” and woke up today he or she would not notice
many changes. Then as now a general ruled, the opposition was illegal or
curtailed, elections were managed, the turnout was low, but results were
stellar. With the 98 per cent approval of the new constitution by only 39 per cent
of voters the deep state is back in Egypt. In a way it was never gone. When
Mubarak became untenable the army let him fall in order to preserve its vested
interests. During their short rein the Muslim Brotherhood and President Mohamed
Morsi never managed to penetrate the pillars of the ancien regime, the Ministry
of Interior, the judiciary and the military.

With the new constitution the latter
has solidified its position. It appoints the Minister of Defense for the next
eight years and retains extensive rights to charge critics in military courts.
In the upcoming presidential elections next summer this process will likely
come full circle; General Abdul Fatah al-Sisi has already said that he would
stand ready if the people called him.

The new constitution cements the
privileges of the military, which presides over an array of economic interests
ranging from bakeries to car factories and bowling alleys. The military is not
only a state within a state it is also an economy within an economy,
characterized by stasis and unfair advantages. Its shadowy networks of
enterprise control between 8 and 30 percent of Egypt’s GDP according to various
estimates. It enjoys tax privileges and supply monopolies. Cheap labour in the
form of recruits helps, too. Who would have thought that such benefits would be
given up easily?

The blunders of Morsi and the Muslim
Brotherhood played into the hands of the military. They showed autocratic
aspirations and failed to build a broad-based reform coalition after winning
low turnout elections by a narrow margin. Their conservative and discriminatory
agenda alienated women, secularist Egyptians and Christians who constitute
about 10 percent of the population.

Morsi also proved incapable of easing
Egypt’s economic malaise. The resulting tamarrod
movement and the protests of millions against his rule were not staged by the
military, but genuine expressions of widespread discontent. When Morsi was
toppled, the same people who brought down Mubarak applauded helicopter gunships
that showed the army’s support for the manifestations. Many aspects in the new
constitution like minority rights, formal gender equality and the outlawing of
parties that are based on "religion, race, gender or geography"
undoubtedly come as a relief to many Egyptians. After three years of turmoil
and neighbouring countries like Syria and Libya in freefall, wishes for calm
and a strong man are widespread.

Given the dismal track record of
Morsi’s short reign and his reactionary agenda one is hard-pressed to feel
sympathy with Egypt’s first democratically elected president. Yet his removal
through a coup d’état rather than
democratic due process and the subsequent ban of the Muslim Brotherhood may
prove costly in the future. It excludes a large part of Egypt’s divided society
from participation and will encourage the fringes to revert to violence as
already evidenced by attacks on politicians, police stations and churches.

Meanwhile Egypt’s economic crisis
continues unabated. Before the downfall of Mubarak the country was a darling of
the World Bank, whose Ease of Doing Business Index (EDBI) called Egypt the
world’s leading reformer in 2008. In
2010, the country had been among the top ten reformers of the EDBI for four
years in a row.

This tells us more about the
construction of such indices than about reality. Real GDP growth rates of 5-7
per cent were appealing, but they did not trickle down to the general
population. Household incomes did not improve in the 2000s. Now, even the
growth rates are gone. Tourism is down and unlikely to recover unless the
security situation improves. Egypt has turned into a net oil importer at the
end of the 2000’s and its natural gas production has declined instead of
increasing. It has received emergency deliveries of Liquefied Natural Gas from
Qatar in 2013 and might have to turn to Israel for imports of gas from newly
discovered fields in the Eastern Mediterranean.

Its manufacturing industry struggles to
compete with Asian producers in mass markets like textiles, while countries in
southern Europe have gained competitiveness after internal devaluations. Power
cuts, unrest and haphazard policies have negatively affected business and some
multinationals like GM or Electrolux have suspended operations citing security
concerns.

The Egyptian economy is now on life
support and dependent on financial transfers from Saudi Arabia, Kuwait and the
UAE. They have partly replaced funds from Qatar, which placed its bets on
Morsi’s Muslim Brotherhood. Gulf funds have allowed Egypt to refuse financial
emergency aid from the IMF, which would have come with stipulations of economic
reform. However, UAE's Deputy Prime Minister Sheikh Mansour Bin-Zayed said in
October that such aid would not last forever. Egypt may soon face tough
choices.

Egypt’s neighbours reacted to the
toppling of Morsi with thinly disguised delight and unusual unity. Saudi Arabia
and Syria welcomed it. Israel trusts the generals more to keep the cold peace
of Camp David and rein in Hamas. Gulf countries have developed an existential
angst regarding spillover effects of the Arab spring. Fears of meddling in
their internal affairs have bordered on the theatrical in the case of Dubai’s
police chief Dahi Khalfan who claimed that the Muslim Brotherhood was planning
to overthrow Gulf governments.

Morsi’s state visit to their arch
nemesis Iran in 2012 did not help. It led to fears of Egyptian-Iranian
rapprochement after decades of heartfelt enmity: Egypt granted the Shah exile
who is buried in Cairo’s Al-Rifa’i mosque, the Islamic Republic retaliated by
naming a street in Tehran after Khalid Islambouli, the assassin of President
Anwar al Sadat.

Rather than selling products, Egypt now
offers its strategic position and political favours to the Gulf to get the
foreign exchange it needs to function. The question is how long this can be
sustained and what will happen if it stops. A deep state that presides over a
torn civil society without shared pluralistic traditions will be ill equipped
to deal with the repercussions and will likely lose cohesion.

About the author

Eckart Woertz is senior researcher at the Barcelona Centre for International Affairs (CIDOB). He is the author of Oil for Food (Oxford University Press) and can be followed on Twitter @eckartwoertz.

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